Treasury commended for lithium value addition
ECONOMIC analysts have commended the Treasury’s efforts to broaden the revenue base through new taxes despite reservations by some stakeholders while welcoming proposals to promote domestic lithium value addition for the benefit of the economy.
Announcing the 2024 National Budget Statement last Thursday, Finance, Economic Development, and Investment Promotion Minister, Professor Mthuli Ncube, outlined a string of public revenue generation measures to stimulate support for key development projects.
He also reiterated the need to promote the exportation of processed minerals to increase the much-needed foreign currency earnings as opposed to exporting raw commodities.
Going forward, any lithium development process that does not result in the production of lithium carbonate is not regarded as beneficiation and is liable to an export tax, said the minister.
He noted that substantial mineral revenues can be generated from the beneficiation of key minerals.
With a significant resource endowment of Platinum Group of Metals, gold, lithium, and diamonds, economic transformation and development can be anchored on beneficiation.
Commenting, Lupane State University (LSU) Business Clinic Development Manager, Mr George Nhepera, said the mineral value addition and beneficiation thrust was the only way for Zimbabwe to get enough forex through exports.
“The changes around lithium processing are indeed commendable as they give us more foreign currency when we export our lithium in a processed form instead of raw material,” he said.
Early this year, Cabinet approved the Lithium Ore Policy anchored on fostering the country’s beneficiation capacity, as well as maximising earnings from the country’s mineral endowment while putting a stop to the export and smuggling of lithium-bearing ores.
Government had to step in to bring order to the lithium industry, which witnessed a rush over the last two years with very little benefit to the economy as players took advantage of a lack of a policy framework for the mineral to smuggle it out of the country.
While some have negatively criticised the introduction of the new Wealth Tax, sugared beverages tax, and domestic minimum top-up tax, among other proposed user fee reviews, Mr Nhepera said these were commendable but should have been pegged at a lower rate.
He said it was good to make increases in line with the inflation levels of the United States dollar currency, which he said in his view is very low.
Mr George Nhepera and Mr Morris Mpala
“As a nation, I think we need to remain guided economically. I say this in respect of the new wealth tax on residential properties above US$100 0000 of one percent.
“While the tax reasoning behind it could be sound and proper, of concern is the high percentage tax, which could have started at a lower level of say 0,01 percent to encourage compliance and also be affordable to pay,” said Mr Nhepera.
“By starting something new at a higher rate and again controversial, it could end up affecting our capacity to attract investment in the lucrative properties market.”
Bulawayo businessman and economist, Mr Morris Mpala, said the idea behind the budget was positive given that no external funding is coming into Zimbabwe.
“The Wealth Tax could have had a minimum threshold of USD 750 000. Lifestyle audits weren’t executed adequately. Toll fees and fuel reserves are a bit steep and could have unintended consequences like increased cost of doing business,” he said.
“Sugar tax is ideal and we should have a hard tax for tobacco and alcohol, also ring-fenced for cancer rehabilitations. The Domestic Minimum Top Up Tax (DMTT) was long overdue.”
In his budget speech, Prof Ncube said DMTT was part of the global rules, which aim to ensure that global profits of large multinational enterprises are taxed at a minimum Corporate Income Tax rate of 15 percent. —chronicle
